Why sustainable innovation is the future of investment

Jeffrey Deans

Managing Director, Save & Invest

Lynsey Fraser

Director, Save & Invest

With over $50 trillion USD invested in pension schemes worldwide, sustainable investments stand to make a significant difference to the future health and wealth of the planet.

Sustainable business practices, from environmental awareness to social responsibility, are becoming higher priorities for investors.

Jeffrey Deans, Managing Director of Save and Invest, explains, “In the past, we’ve been used to ethical investment, but that never really got into the mainstream. Over the last two years, however, because of pension scheme legislation requiring an environmental, social and corporate governance (ESG) strategy for portfolios, sustainable or positive impact investment has taken over.”

Lynsey Fraser, Director at Save and Invest, agrees: “Clients have become much more aware of sustainability. It is top of the agenda. Media reporting is creating much more focus on the challenges we face; be it climate change, scarcity of natural resources or inequality, and we are finding people want to bring their personal values to their investments much more.

“Clients are avoiding single-use plastics and taking steps to avoid their carbon footprint, so it stands to reason that they are also thinking about how their money is being invested.”

Pandemic priorities

During the COVID-19 pandemic in particular, awareness of the impact on the world around us has increased.

“Conversations have definitely changed over the last 18 months, but COVID-19 has really accelerated these changes,” says Fraser. “The shift in sentiment has been quite remarkable.”

As a result, there is an increasing desire among investors to link their pensions or savings with the sustainable priorities they have in other areas of their lives. Thus, the market for companies which can prove their work is sustainable and has a positive impact is growing.

“Sustainable investment funds want to invest in companies that are going to improve people’s quality of life, be that through the environment or a more stable economy. They believe these are the companies that are going to survive longer term and provide the best or most competitive medium to longer term returns,” Fraser explains.

Media reporting is creating much more focus on the challenges we face; be it climate change, scarcity of natural resources or inequality.

The crux of investing

At Save and Invest, 98% of investors have taken up the option of moving their funds into sustainable investment.

“We’ve had virtually no clients who have not decided to move to sustainable options,” says Deans. “Sustainable investment is no longer anything other than what investment is about. It really is the crux of investing.”

Although Save and Invest puts money into sustainable investment funds rather than selecting individual companies, the group keeps its clients updated with stories of the positive impact their money is having.

“We want to bring home to clients why certain companies are the companies of the future,” Deans explains. “If they invest in a tractor company, and the tractor is going to spread pesticides, clients want to know it will have cameras and sensors in it to ensure it hits the weeds not the grain and isn’t going to damage bees.”

A win-win situation

Furthermore, the company believes it is these creative, forward-looking companies that will provide both the financial and the ethical wins of the future.

“Innovation is what will save the world,” says Deans. “We don’t know what innovation is next, but we know it is where the money will be made. It won’t be by companies that destroy the planet or upset society; companies which exploits their workforce, for example.

“Not only do we see sustainable investing meeting the values of our clients, we believe it will provide the best possible returns in the medium term. It’s not a gimmick, it actually is the mainstream.”